According to the Energy Efficiency Partnership for Homes (EEPH), who set out the definitive lay-lines for green mortgages, and the Ethical Investors Group (EIG), who surveyed and classified mortgage lenders accordingly, there are currently three major green mortgage lenders to choose from: Ecology, Co-Operative Bank, and Norwich & Peterborough.
However, before you begin, consider your circumstances first, and choose a lender who best suits your ethical position – this could be deciding ‘how’ it is you’ll be contributing to the environment; whether you’d prefer to make a donation, or offset the associated carbon emissions, will be entirely your choice.
It is also important to note that green mortgages are typically more expensive than a standard mortgage, and some lenders will even carry assessments or ask for a minimum advance, so make sure you choose an interest payment rate that fits your circumstances.
Ecology
Ecology is dedicated to improving the environment by promoting sustainable housing and communities, and will only lend on properties that provide an environmental benefit.
It also provides mortgages for energy efficient housing, such as the renovation of derelict properties to make them much more ecological.
Borrowers do not need to be ‘green’ to take advantage of an Ecology mortgage. Ecology’s C-Change mortgage discount gives a 1% discount of the standard variable rate on funds borrowed to install energy efficiency measures or renewable energy systems. These include:
Installing floor, wall and roof insulation
Double or triple glazing
Installing low water-use appliances
Installing a condensing boiler
Co-Operative Bank
As part of its eco mortgage, Co-Operative Bank will make an annual direct donation to Climate Care to offset 20% of an average home’s carbon dioxide production for every mortgage granted. Climate Care is an organisation dedicated to combating global warming by reforestation, creating new woodlands in Uganda.
In 2005, Co-Op paid over £250,000 to offset a fifth of the carbon dioxide arising from their mortgage customers’ homes, effectively neutralising over 50,000 tonnes of carbon dioxide emissions.
Co-Op will also not invest in companies that repeatedly damage the environment or are involved in fossil fuels or deforestation.
For house purchases, Co-Op will provide you will a free home energy report along with your valuation to tell you how energy efficient your new home is and how you can improve it.
Norwich & Peterborough
Every year for the first five years of its green mortgage, Norwich & Peterborough will plant eight trees on your behalf to help make your home more carbon neutral. These new forests are being created in East Anglia and Lincolnshire by Future Forests.
The valuation of your home is free, and you’ll get a £500 rebate to make energy efficiency improvements as recommended by the survey.
Mortgages are available to first time buyers, moving home and remortgages.
Now that you are aware of the three major components of UK green mortgage lending, do not be deterred from investigating other organisations that may in fact be tailored to suit your needs – there are a vast range of lenders available to today’s market, so be sure to seek professional advice where needed, and never be afraid to ask another question.
